Darling averts revolt on 10p tax

The Government has avoided a potential revolt over the abolition of the 10p income tax rate after rebel backbenchers backed away from forcing their demands to a vote in the House of Commons.

Some 20 Labour MPs put their names to a call for additional measures to ensure full compensation to the 1.1 million low-paid workers who remain out of pocket following Chancellor Alistair Darling's £2.7 billion compensation package for the 10p tax losers.

But they decided not to press a vote after hearing assurances from the Treasury's Financial Secretary Jane Kennedy that Mr Darling will bring forward concrete proposals on the issue in his Pre-Budget Report this autumn.

Mr Darling faces a further challenge to his Budget measures on Wednesday, when the Commons will debate plans to increase vehicle excise duty (VED) on the most polluting cars.

A Conservative amendment to the Finance Bill aims to stop ministers applying the new VED rates of up to £455 to cars bought before the tax hike was announced in March.

Tory Treasury spokeswoman Justine Greening said 2.3 million families will lose out to the tune of between £100 and £245 each because the Government intends to apply the new rates to all vehicles registered since 2001.

Some 69 MPs - including 49 Labour backbenchers - have signed a Commons motion urging ministers to reconsider the "retrospective" nature of the tax rise.

According to Tory calculations, the Budget changes will move 1.2 million of the most polluting band F cars registered between 2001 and March 2006 into the new bands L or M, increasing their VED from £210 now to £430 or £455 in 2010. A further 1.1 million will end up in band K, bringing the cost of their tax disc up from £210 to £310.

Ms Greening said that cars in the new top bands would include Citroen C8s, Renault Espaces and VW Passats, while Band K would include some Ford Mondeos and Vauxhall Astras.

But a Treasury spokesman said: "Low-income families are far more likely to buy or drive cars in lower VED bands, and will therefore either pay less or the same as they do now."